Wednesday, August 13, 2008

The Gang of Ten are a group of five Democrat and five Republican Senators who have come together around a plan for energy in America. They are obviously well intentioned. They are equally as obviously very misguided.

When evaluating energy plans within America today, there are certain criteria we can all look for at this point:

1. Does it open up the coast of the U.S. to exploration and exploitation? There are an estimated 115,000,000,000 barrels of oil on the OCS off both coasts.

2. Does it open up ANWR? There are an estimated 10,000,000,000 barrels of oil in ANWR.

3. Does it open up oil shale to exploration and exploitation? Our potential oil shale reserves dwarf the oil reserves of Saudi Arabia. It is estimated that we have between 800,000,000,000 – 2,000,000,000,000 barrels of oil tied up in domestic oil shale.

4. Does it allow us to exploit our natural gas reserves and to use these reserves appropriately. Our natural gas reserves are incredibly vast, with the two problems being the inability to exploit them within the continental U.S. and the inability to use them easily as a substitute for oil and gas.

5. Does it address the insane regulatory environment that, by allowing private law suits brought before hand-picked judges, adds years and millions to hundreds of millions to the cost of exploiting our resources.

6. Does it provide a strategy and plan for the development of alternative fuels via both funding for R&D and competitions? Dircected research is great, but I am so bitten by biased and politicized science at this point that I wonder if simple competitions aren't a better way to go.

7. Does the plan stop the subsidies for ethanol and end this insane push towards using arable land for the production of fuel rather than food? We have self-created a food crisis throughout the world by diverting food to fuel. Costs of food are skyrocketing and jungles are being deforested to set up Palm Oil plantations. Government subsidies and mandates for bio-fuel needs to end.

With the above in mind, Sen. Bob Corker and the "gang of 10" senators are pursuing a bipartisan comprimise that looks more like a road to hell paved with good intentions than a road that will lead to a reasonable energy posture for the U.S.

An outline of his plan from his official website is here. It provides for limited oil leasing off a portion of several states. It does not open up ANWR. It does not provide for oil shale exploration and development. It does nothing to alleviate the insane regulatory environment.

The plan does push for more nuclear development, but seems to address the economic side from the standpoint of subsidies, not reducing costs by reviewing the regulatory burden that has kept new plants from being built for the past several decades. According to recent estimates discussed in the WSJ, the cost of new nuclear plants may now be such as to make them cost prohibitive. Nuclear energy that, because of start up costs, produces energy at two to three times more per killowat hour than an oil or coal plant produces energy is not going to be viable.

The plan pushes for "flex fuel" vehicles, but someone needs to define "flex fuel" for me. If Sen. Corker has ethanol in mind - or any other biofuel that is going to take arable land out of the food production cycle - it is completely insane.

I do not know T. Boone Pickens plan for wind energy is viable, as I discuss in detail here. But the Pickens plan for exploitation and use of our natural gas resouces sounds promising indeed, including for use in place of gas as vehicle fuel. If this is part of Sen. Corker's definition of "flex fuel," then perhaps that portion of the bi-partisan plan at least makes some sense. If not, then no. Emphatically no.

Sen. Corker apparently called Instapundint and claimed that the new bill will open up the entire coast line to seismic exploration. That is not apparent from the plan description in the link from Sen. Corker's site. Regardless, allowing exploration is not enough and shouldn't even be on the table. We've explored ANWR, yet the billions of barrels of oil there still sit in the ground. Allowing exploration only is like saying to a starving person that they can go ahead and smell the food, just don't eat. Any viable plan must allow for exploration and exploitation, period.

This attempt at compromise apprears very weak indeed. As the old expression goes, the road to hell is paved with good intentions. The collary to that is that the side of the road is apparently littered with useful idiots.